U.S. DEPARTMENT OF THE INTERIOR

BUREAU OF LAND MANAGEMENT

RECORD OF DECISION

HAYCREEK II LEASE BY APPLICATION

WYW172684

CAMPBELL COUNTY, WYOMING

INTRODUCTION

On March 24, 2006, Kiewit Mining Properties, Inc. (Kiewit) filed an application with the 

Bureau of Land Management (BLM) to lease the Federal coal included in a tract west of 

and immediately adjacent to the Buckskin Mine in Campbell County, Wyoming, 

approximately 12 miles north of Gillette (Appendix 1, Figures 1 and 3). The Federal

coal reserve lease was applied for as a maintenance tract for the Buckskin Mine, which 

is operated by Buckskin Mining Company, a directly held subsidiary of Kiewit. The 

application was made pursuant to the Leasing on Application regulations found in the 

Code of Federal Regulations (CFR) at 43 CFR Subpart 3425.1. The delineated tract, 

which was assigned case file number WYW172684, is referred to as the Hay Creek II

Lease by Application (LBA).

Kiewit applied to lease Federal coal reserves in order to extend the life of the Buckskin

Mine. The BLM refers to this type of application as a maintenance tract (a tract of 

Federal coal that is adjacent to, and can be mined by, an existing active coal mine). 

The Hay Creek II LBA has been evaluated in an environmental impact statement (EIS). 

The EIS is the Buckskin Mine Hay Creek II Coal Lease Application EIS (hereafter 

referred to as the Hay Creek II EIS). The draft EIS was issued for public comment in 

March, 2010 and the final EIS in July, 2011. 

Under Alternative 2 (the BLM preferred alternative) of the Hay Creek II EIS, BLM 

considered adding all or a portion of the BLM study area to the tract as applied for and 

offering one tract for sale. On two occasions during the EIS preparation, May 19, 2008, 

and November 28, 2008, Kiewit Mining Properties, Inc. modified their LBA. On 

September 3, 2010, Kiewit notified BLM that their most recent LBA modification no 

longer offered a mechanical advantage around a sand anomaly; therefore, they would 

be interested in a tract based on their original lease application of 1,447 acres rather 

than their most recent modification of 419.04 acres (Appendix 1, Figure 2). BLM 

personnel reviewed the applications and delineated a proposed tract from within the 

study area that would best serve the public interest. On September 21, 2012 a sale

tract was delineated from the preferred alternative tract such that all surface for which

surface owner consent was not obtained was removed from the delineated tract. The 

final tract delineation contains approximately 167,001,557 tons of one contiguous block 

of Federal coal under approximately 1,253.27 acres of Kiewit Mining Properties Inc. 

privately-owned surface as estimated by the BLM.
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Alternative 2 of the EIS assumes that the applicant would be the successful bidder on 

the tract, that the tract would be mined as a maintenance lease for the existing Buckskin

Mine, and that one competitive sealed bid lease sale would be held. Additionally, 

Alternative 2 assumes the applicant would recover the Federal coal using the same 

methodology, machinery, and facilities that are currently being used to recover the coal 

in the existing Buckskin Mine coal leases. 

Kiewit anticipates that if they acquire the lease for the Hay Creek II LBA delineated tract 

it could extend the mine life by approximately 10 years. The Buckskin Mine has a

permit to conduct mining operations approved by the Wyoming Department of 

Environmental Quality Land Quality Division (WDEQ/LQD) as provided for by the

Mineral Leasing Act (MLA) of 1920, as amended, and a mining plan approved by the 

Assistant Secretary of the Interior for Land and Minerals Management to conduct 

surface coal mining operations on their existing coal leases. The mine complies with 

the requirements of the Clean Air Act (CAA) through an air quality permit approved by 

the Air Quality Division of the Wyoming Department of Environmental Quality 

(WDEQ/AQD) in March of 2011 which allows mining of up to 42 million tons of coal per 

year. As estimated in the EIS, production at the Buckskin Mine by the year 2015 is

assumed to be approximately 25 million tons of coal per year and remain at that rate 

through the year 2020. 

BLM administers the Federal Coal Leasing Program under the MLA as amended and 

the Federal Coal Leasing Amendments Act of 1976. If any proposed lease tract 

contains surface lands which are under the jurisdiction of any Federal agency other than 

the Department of the Interior (USDI) or are occupied by a qualified surface owner, that 

agency or individual must consent to the issuance of the lease, and in the case of the 

Federal agency prescribe the terms and conditions to be imposed on that lease (43 

CFR 3400.3-1 and 3420.4-2 and 3427.1). The Hay Creek II LBA, as configured does 

not include any surface held in Federal ownership or any lands held in private 

ownership other than those lands owned by the applicant, Kiewit. 

BACKGROUND

Lease by Application Process

In the Powder River Basin (PRB), maintenance tracts are nominated for leasing by 

companies operating adjacent, existing mines. To process an LBA, the BLM must 

evaluate the quantity, quality, maximum economic recovery (MER), and fair market 

value (FMV) of the Federal coal. The BLM must also evaluate the environmental and 

socioeconomic impacts of leasing and mining the Federal coal in accordance with the 

requirements of the National Environmental Policy Act of 1969 (NEPA). BLM prepared 

the Hay Creek II EIS to evaluate and disclose potential impacts of leasing the Federal

coal included in the Hay Creek II coal lease application. Although leasing the Hay 
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Creek II LBA tract would not authorize mining operations on the tract, the EIS evaluates

the potential impacts of mining the Hay Creek II LBA because mining is a logical 

consequence of issuing a lease for a maintenance tract of Federal coal.

The USDOI Office of Surface Mining Reclamation and Enforcement (OSM) is a 

cooperating agency on the Hay Creek II Coal Lease EIS because OSM is the Federal

agency with the primary responsibility to administer programs that regulate surface coal 

mining in accordance with Section 503 of the Surface Mining Control and Reclamation 

Act of 1977 (SMCRA). OSM also recommends approval, approval with conditions, or 

disapproval of the MLA mining plan to the Assistant Secretary of the Interior, Lands and 

Minerals Management. 

The Wyoming Department of Environmental Quality (WDEQ) is a cooperating agency

on the Hay Creek II Coal Lease EIS because the WDEQ has a cooperative agreement 

with the Secretary of the Interior to regulate surface coal mining operations on Federal

and non-Federal lands within the State of Wyoming. WDEQ regulates airborne 

emissions in Wyoming and administers the air quality standards developed by the 

Environmental Protection Agency (EPA). 

By law and regulation, the LBA leasing process is an open, public, competitive sealedbid process. Bidding at any potential sale is not restricted to the applicant. In order for 

BLM to award and issue a coal lease, the highest bid received must meet or exceed the 

fair market value of the coal as determined by BLM’s economic evaluation. 

Kiewit filed the Hay Creek II LBA because the area applied for is adjacent to their 

existing approved mining operations at the Buckskin Mine and the Federal coal can be 

mined using their existing mine facilities, equipment, and employees. As shown in 

Appendix 1, Figures 1 through 4, the Buckskin Coal mine and the Hay Creek II LBA are

adjacent to one another. In the Hay Creek II Coal EIS, the alternatives that are 

analyzed in detail assume that the applicant will be the successful bidder if a 

competitive sale is held.

History of Coal Leasing Activity in the Wyoming Portion of the Decertified Powder 

River Coal Region

Since decertification of the Powder River Coal Region in 1990, 27 Federal coal leases 

in Campbell and Converse counties, Wyoming, have been issued under the LBA 

process with competitive sealed-bid sales. These leases include approximately 68,198 

surface acres and approximately 7,897,861,524 tons of mineable coal. These leases 

were issued to a number of mines in the Wyoming PRB and were applied for to extend 

operations (maintenance leasing). Several of the mines have changed ownership, 

names, or have merged with other mines since decertification. The following is an 

accounting of the number of those leases issued since decertification associated with 

each mine: Buckskin (1), Eagle Butte (2), Caballo (1), Belle Ayr (1), Cordero-Rojo (2), 

Black Thunder (7), North Antelope-Rochelle (7), Antelope (5). The remaining lease, the 
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West Rocky Butte, was issued to a company intending to open a new mine. The West 

Rocky Butte lease was issued to Northwestern Resources Company in 1992, but the 

new mine was never developed. 

Pending Coal Leasing Applications and Other Proposed Projects in the Wyoming 

Powder River Basin 

There are seven pending maintenance lease applications in the Wyoming portion of the 

PRB, including the Hay Creek II LBA tract (Appendix 1, Figure 1). As applied for, the 

pending coal lease applications include approximately 27,167 acres and 3.53 billion 

tons of Federal coal. In addition to the Hay Creek II LBA, the pending coal lease 

applicant mines are: North Hilight Field (Black Thunder Mine), West Hilight Field (Black 

Thunder Mine), Maysdorf II (Cordero-Rojo Mine), West Jacobs Ranch (Black Thunder

Mine), Belle Ayr West (Belle Ayr Mine) and Antelope Ridge (Antelope Mine).

Oil and gas leasing and development have occurred in this area in addition to coal 

leasing and mining. Both conventional and coal bed natural gas (CBNG) wells have 

been drilled in and around the Buckskin Mine and the Hay Creek II LBA area. 

Conventional and CBNG resources are currently being recovered from Federal and 

private oil and gas leases in the application area. Federal oil and gas lease ownership 

in the Hay Creek II LBA area is shown on Map 3.11-2 on page 3-164, and is described 

in Table 3.11-2 on page 3-165 of the Final EIS. Federal oil and gas lessees and private 

interests identified by the applicant were included on the mailing list for the Hay Creek II 

Coal EIS. 

The EIS discusses energy development in and around the Hay Creek II LBA tract. The 

discussion includes a summary of the results of an analysis of the conventional oil and 

gas drilling that has occurred in the area, prepared by the BLM Wyoming Reservoir 

Management Group (WSO-RMG). The analysis found that there are no active

conventional oil or gas wells on lands included in the Hay Creek II general analysis 

area. 

The EIS also includes a summary of the results of the BLM Wyoming State Office 

Reservoir Management Group (WSO-RMG) analysis of the coal bed natural gas 

(CBNG) resources in the area. At the Buckskin Mine, the mineable coal seams are the 

Wyodak-Anderson coal zone. In this area, CBNG has been produced from the 

Wyodak-Anderson zone since the late 1980s. The WSO-RMG analysis indicated that in 

the Wyodak-Anderson zone underlying the Buckskin Mine, CBNG depletion had already 

occurred before accelerated CBNG development began in the region in the late 1990s; 

thus, methane in the coals in the Hay Creek II LBA will be significantly depleted by the 

CBNG operators before mining occurs. This will result in the reduction of the amount of 

methane released into the atmosphere by coal exposed during mining. The EIS 

identifies CBNG wells on lands included in the BLM study area of the Hay Creek II LBA

and the operating status of those wells. The remaining CBNG wells can continue to 

operate in advance of coal mining until the wells become prepared for mine-over. 
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Several mechanisms can be used to facilitate recovery of CBNG resources prior to 

mining if the Federal coal in the tract is leased:

• BLM will attach a Multiple Mineral Development stipulation in the Federal coal 

lease which states that BLM has the authority to withhold approval of coal mining 

operations that would interfere with the development of mineral leases that were 

issued prior to the Hay Creek II LBA coal tract being leased (Appendix 2). 

• BLM has a policy in place regarding CBNG-coal development conflicts (BLM

Washington Office Instruction Memorandum (IM) No. 2006-153). The IM directs

BLM decision-makers to optimize the recovery of both CBNG and conventional 

resources and to ensure that the public receives a reasonable return. This policy

offers royalty incentives to CBNG operators to accelerate production in order to 

recover the natural gas while simultaneously allowing uninterrupted coal mining 

operations. In addition, the IM also states that it is the policy of the BLM to 

encourage oil and gas and coal companies to resolve conflicts between 

themselves and, when requested, BLM will assist in facilitating agreements 

between the companies. 

• Mining of the Hay Creek II LBA tract would not be authorized until: 1) the coal 

lessee obtains a permit approved by the WDEQ/LQD to mine the tract, and 2) the

MLA mining plan is approved by the Secretary of the Interior. Before the MLA 

mining plan can be approved, BLM must approve a Resource Recovery and 

Protection Plan (R2P2). Prior to approving the R2P2, BLM can review the status 

of CBNG and conventional oil and gas development on the tract and the mining 

sequence proposed by the coal lessee. The permit approval process generally 

takes the coal lessee several years to complete and CBNG resources on the coal 

tract could continue to be recovered during that time period.

• Prior to mining the Federal coal, the coal lessee can negotiate an agreement with 

the oil, gas, and pipeline owners and operators regarding the removal of their 

existing facilities on the Hay Creek II LBA tract.

The EIS discusses energy related development in the PRB and around the Hay Creek II 

LBA tract. The discussion includes a summary of coal related energy development that 

is occurring and includes projected development which could occur in the PRB up to the 

year 2020 (Powder River Basin Coal Review Task 2 Update 2009). Two coal related 

development activities have been proposed near the Buckskin Mine.

The proposed coal technology project by White Energy Coal North America plans to use 

a binderless coal briquetting technology in two power plants, one near the Buckskin 

Mine and one near the Caballo mine. The project is in the early planning stages with 

construction possible by 2020. 
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Any additional proposed coal-fired power plants that plan to initiate operation would 

need to be currently undergoing air permit review in order to obtain the required 

construction permits and complete construction in time to use coal from this LBA prior to 

it being mined-out at the projected mining rates. 

Methane production from in situ low temperature methanogenesis is being proposed in 

the PRB. Several companies have developed methods of increasing biogenetic 

methane within coal seams through enriched methanogenesis using the coal as a 

hydrogen source. This process uses the predominantly anaerobic microorganisms that 

metabolize the complex organic molecules in hydrocarbon deposits and produce 

methane gas as a waste product. The companies propose to transform uneconomic 

CBNG wells into economic production wells and use the existing infrastructure for their 

operations. None of the CBNG wells located within Hay Creek II tract are presently

planned for use in methanogenesis operations and none of the wells proposed for this 

process are likely to be impacted by operations at the Buckskin Mine during the life of 

the lease tract. Furthermore, the Buckskin Mine has mine-over rights to all CBNG wells 

on the Hay Creek II LBA tract.

The proposed coal plants, coal methanogenesis projects, ongoing and proposed oil,

gas, and CBNG operations are separate projects being developed independently of 

leasing the Hay Creek II LBA. If these other projects are developed as proposed, and 

the Hay Creek II lease tract is leased and mined as proposed, there would potentially be 

some overlap between the environmental and economic impacts of constructing and 

operating some of those projects and the environmental and economic impacts of 

mining the Hay Creek II LBA tract. The cumulative effects of these projects are 

described in Chapter 4 of the Buckskin Mine Hay Creek II Coal Lease Application EIS. 

The cumulative impact discussion in the EIS is based on the analyses done for the PRB 

Coal Review, which can be viewed on the BLM website at: 

http://www.blm.gov/pgdata/content/wy/en/info/NEPA/documents/hpd/SouthGillette.html

DECISION

As BLM Wyoming High Plains District Manager, my decision is that it is in the public 

interest to offer the Hay Creek II LBA tract as described below for competitive sale so 

that these reserves are available to compete for sale in the open coal market to meet

the national coal demand that is expected to exist until at least 2035. The public 

interest is served by leasing the Hay Creek II LBA tract because doing so provides a 

reliable, continuous supply of stable and affordable energy for consumers throughout 

the country. Developing this coal also helps reduce our nation’s dependence on foreign 

energy supplies and provides significant socioeconomic benefits for the United States, 

Wyoming, and local communities.
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Under this decision, Alternative 2 for the Hay Creek II LBA as described in Chapter 2 of 

the Buckskin Mine Hay Creek II Coal LBA EIS has been selected. Under Alternative 2

the BLM has added part of the BLM study area to the tract as applied for and removed 

the lands from consideration which have not received consent from the qualified surface 

owner. 

The tract will be offered for lease at a competitive sealed-bid sale. If the highest bid 

received at the sale meets or exceeds the FMV as determined by the BLM and if all 

other leasing requirements are met, a lease will be issued to the successful qualified 

high bidder. The competitive lease sale will be held as described in the Federal

regulations found at 43 CFR Subpart 3422, Lease Sales. 

In the event that the highest bid submitted at the competitive lease sale of the Hay 

Creek II LBA tract does not meet or exceed the FMV as determined by BLM, the BLM 

may, but is not obligated to, re-offer the coal tract for leasing at a later date.

This decision is in conformance with the Approved Resource Management Plan for 

Public Lands Administered by the BLM Buffalo Field Office (RMP), which was 

completed in 1985 with an RMP Plan Update in 2001 and an RMP Plan Amendment in 

2003.

This decision incorporates by reference the standard coal lease stipulations which 

address compliance with the basic requirements of the environmental statutes and 

additional BLM special stipulations (Appendix 2). 

Under Alternative 2, it is assumed that the applicant would be the successful bidder on 

the Hay Creek II LBA tract and that the Federal coal would be mined to extend the life of 

the adjacent Buckskin Mine. The tract would be mined and reclaimed in a logical 

sequence in concert with ongoing mining and reclamation operations at the adjacent 

existing mine. This would be consistent with the analysis of the impacts described in 

the EIS. 

REASONS FOR DECISION

Denying this proposed coal lease is not likely to affect current or future domestic coal 

consumption used for electric generation. Not offering the Hay Creek II LBA tract is 

unlikely to affect changes in the national electric generation portfolio. The rationale for 

this conclusion is summarized below. 

Various commenters on the Hay Creek II Coal EIS asserted that by not leasing this 

LBA, and, in a cumulative sense, by denying proposed coal leasing in the Wyoming 

PRB, BLM would slow global climate change and would push the national electric 

generation portfolio to contain only non-carbon fuel alternatives. BLM has considered 

this comment/issue thoroughly in our decision. 
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BLM agrees that movement toward electric generation capacity not reliant on carbon 

fuels is positive. Hydrocarbon fuels are a finite resource and will become more costly 

and rare. Having more non-hydrocarbon based (instead of hydrocarbon based) electric 

generation would assist in decreasing human-caused greenhouse gas (GHG) 

emissions. Reducing human-caused GHG emissions may help to lessen any harmful 

effects that they may be causing to the global climate system. 

BLM reviewed an independent study that determined the ability of the domestic electric 

generation industry to alter the present portfolio (mix of electric generation technologies) 

corresponding to the time period that the Hay Creek II LBA reserves would be mined. 

The study was by the domestic electric generation industry's research arm, the Electric 

Power Research Institute (Electricity Technology in a Carbon Constrained Future, 

authored by R. James, Carnegie-Mellon University, November 2007).

The study projected the electric generation portfolio to 2030 (beyond the time the Hay 

Creek II lease reserves would be produced) and recognized the possibility of carbon 

regulation. The study related the mix of renewable energy sources, nuclear, and 

hydrocarbon sources, and energy conservation, and found that coal-fired electric 

generation would represent 52-58 percent of the electric generation portfolio by 2030, 

as compared to the current approximately 51 percent. 

The Annual Energy Outlook 2012 Report (Energy Information Administration, June 

2012) represents a forecast to the year 2035. This most recent report forecasts a 

lowered percentage of coal-fired electric generation in the domestic electric generation 

portfolio. By 2035, the report projects coal-fired electrical generation to account for 38 

percent of the total electrical generation; 28 percent from natural gas, 15 percent from 

renewable energy sources and 18 percent from nuclear energy sources. 

Based on these studies, even with a considerably more optimistic projection for 

renewable sources, coal use continues to be projected as the largest portion of the 

domestic electric fuel mix. The factors affecting change in the electric generation 

portfolio are time and cost of alternate technologies, infrastructure and increasing 

electric demand. BLM concludes that during the time that the proposed Federal coal 

lease reserves would be produced, the demand for coal-fired electric generation in the 

United States (U.S.) will still require coal be a major part of the U.S. energy portfolio.

Further, BLM disagrees with the comment that denying the proposed Federal coal 

leasing application would reduce the rate of coal consumption by domestic electric 

generators. Numerous mines located outside of the PRB are extracting and producing 

coal in the United States. In order to supply reliable power for the country’s electrical 

needs, many mines outside of the PRB have the capacity to replace the coal production 

generated by the Buckskin Mine.
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The Hay Creek II LBA coal reserves, if leased and approved for mining, would allow the 

coal mining operator to continue to compete for coal sales in an open, diverse supply 

and demand market. PRB mines have been selling coal in this market for decades, and 

denying this lease offer would not cease currently approved mining operations. Rather, 

a denial would require the mine to stop operations only after the current lease reserves 

are depleted. This would deny the mine operator the ability to compete with other 

operators for a future coal demand that is expected to last until at least 2035. The 

inability of the Buckskin Mine, or any other existing PRB producer, to sell in the coal 

market will not cause electric generators to stop burning coal. Utility companies will 

operate existing coal-burning facilities until either cost issues or regulatory requirements 

make them ineffective, or until they are replaced by non-hydrocarbon electrical 

generation facilities. 

The effect of denying the Hay Creek II LBA would be that the existing mine would cease 

operations after the current reserves are depleted, and the Buckskin Mine would not be 

competitive in the national coal market to meet the future coal demand in the U.S. that 

is expected to last until at least 2035. Other national coal producers have the capacity 

to produce coal and to replace the production from this existing mine. 

PRB coal has competed for an increasing share of coal sales in the market, primarily 

because it is lower cost, environmentally more compliant, and successful post-mining 

reclamation has been thoroughly demonstrated. For these reasons, over the past 

several decades, PRB coal has been replacing other domestic coals in the open 

market, and would be expected to compete similarly in the future.

Cumulatively, the effect of denying the leasing proposed throughout the PRB would be 

that many of the existing mines would cease operations once current reserves are 

depleted (ranging from 8 to 16 years). Those mines would then not be able to compete 

with other mines to meet the future coal demand that is expected to last until at least 

2035. When current reserves are depleted at these mines, their production would likely 

be replaced by other domestic and, potentially, international coal producers with coal 

that is more costly, less environmentally compliant, and has more residual 

environmental impacts.

Many other factors, listed below, were considered in the decision to lease the Hay 

Creek II LBA:

• The BLM coal leasing program encourages the development of domestic coal 

reserves and the reduction of the United States’ dependence on foreign sources 

of energy. BLM recognizes that the extraction of coal is currently necessary in 

order to meet the nation’s energy needs, and a primary goal of the National 

Energy Policy is to add energy supplies from diverse sources including domestic 

oil, gas, and coal. Private development of Federal coal reserves is integral to the 

BLM coal leasing program under the authorities of the MLA of 1920, the Federal

Land Policy and Management Act of 1976 (FLPMA) and the Federal Coal 
10

Leasing Amendments Act of 1976 (FCLAA).

• Kiewit applied for the Federal coal in the Hay Creek II LBA in order to extend the 

life of the Buckskin Mine by allowing them to acquire access to a continuing 

supply of low sulfur compliant coal that will be sold to power plants for generating 

electricity. Continued leasing of low sulfur PRB coal assists coal-fired power 

plants to meet the CAA requirements for sulfur emissions. 

• The leasing and subsequent mining of Federal coal reserves provides the U.S., 

the State of Wyoming, and its affected counties with income in the form of lease 

bonus payments, lease royalty payments, and tax payments. Production of 

Federal coal also provides the public with a supply of cost-efficient, low sulfur 

coal for power generation. The Wyoming Governor, the Wyoming legislature, 

and other state and local officials support Federal coal leasing.

• The BLM is the lead agency responsible for leasing Federal coal lands under the 

MLA as amended. When an application to lease Federal coal is submitted, the 

BLM is obligated to respond to the application in a timely manner. In order to 

process an LBA, BLM must fulfill the requirements of NEPA by preparing an 

environmental analysis. In this case, an EIS was prepared to provide the agency 

decision-makers and the public with a complete and objective evaluation of the 

environmental impacts of leasing and mining the Federal coal. BLM then makes 

a decision on whether or not to offer the Federal coal for lease. In either case, 

BLM must notify the applicant in a timely fashion of its decision.

• The Hay Creek II Coal EIS was prepared in response to an application BLM 

received to lease a tract of Federal coal adjacent to an existing mine in Wyoming. 

The environmental impacts of this decision were fully disclosed in the EIS. 

Public comment was addressed in the Final EIS.

• Offering the Hay Creek II LBA tract (totaling 1,253.27 acres more or less and 

containing approximately 167,001,577 tons of mineable Federal coal reserves as 

estimated by the BLM) is responsive to the coal lease application received on 

March 24, 2006.

• The decision to offer the Hay Creek II LBA coal tract for leasing is in 

conformance with the BLM land use plan decisions covering this area (see 

section entitled “Conformance with Existing Land Use Plans”).

• The BLM’s preferred tract configuration under Alternative 2 (Appendix 1 figure 4) 

provides for maximum economic recovery of the coal resource.

• The U.S. Fish and Wildlife Service has provided written concurrence for leasing 

the Hay Creek II LBA tract pursuant to section 7(a)(2) of the Endangered Species 

Act of 1973, as amended (Appendix 3). Additional surveys will be completed at 
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the permitting for mining stage of the process for the LBA.

• Under Alternative 2, mining in the BLM study area and mine-related activities in 

the support area would have no impact on sage-grouse leks. No Greater SageGrouse leks occur within the Hay Creek II LBA tract as applied for, or within the 

Hay Creek II LBA tract general analysis area. Additional surveys and mitigation 

will be completed at the permitting for mining stage of the process for the Hay 

Creek II LBA tract.

• The entire Hay Creek II LBA general analysis area has been surveyed for cultural 

resources at the Class III level. A total of 14 sites (48CA862, 48CA865, 

48CA868, 48CA1828, 48CA1830, 48CA1832, 48CA1834, 48CA2223, 

48CA3376, 48CA3898, 48CA6360, 48CA6361, 48CA6362 and 48CA6797) were 

documented in the general analysis area. None of the sites are eligible for the 

National Register of Historic Places (NRHP). No sites of known Native American 

religious or cultural importance were identified by BLM in the general analysis 

area. Following the protocol agreement between the Wyoming BLM and the 

Wyoming State Historic Preservation Office (SHPO), on February 12, 2009 BLM 

notified Wyoming SHPO that issuance of the lease for the Hay Creek II LBA 

would result in no effect on historic properties. Once a mine plan is submitted, 

the section 106 compliance process will be completed by WDEQ and OSM in 

consultation with the Wyoming SHPO and interested tribes.

• Issuing a Federal coal lease for the Hay Creek II LBA tract would not result in the 

creation of new sources of human-caused GHG or mercury emissions. The 

Buckskin Mine would produce the Hay Creek II LBA coal at currently permitted 

levels using existing production and transportation facilities. If the Hay Creek II 

LBA tract is leased and mined, site-specific GHG emission rates from the 

Buckskin Mine are anticipated to increase slightly compared to current emission 

rates due to increased strip ratios and added hauling distances. 

• If the Hay Creek II LBA Federal coal is leased and mined at the currently 

permitted levels and is used to generate electricity by coal-fired power plants, the 

emissions of GHG and mercury attributable to the coal produced at the Buckskin

Mine would be extended for approximately 10 additional years. The rate of 

anthropogenic CO2 and mercury emissions would depend upon the permitted 

levels at the coal combustion facilities where the coal is burned and the potential 

emission limits that may be applied to those facilities in the future by regulation or 

legislation. 

• The potential for regulation of GHG emissions as an air pollutant is recognized in 

this decision. An effect on coal production and use may develop, depending on 

how the regulatory actions affect the demand for coal and the mix of methods 

used to produce electricity in the U.S. Effects to coal demand are reflected 
12

through the coal market, coal pricing, and supply. If demand decreases, it is 

expected that less efficient coal producers, or those with reserves having less 

desired coal characteristics, may lose customers. 

PUBLIC INVOLVEMENT

BLM received the Hay Creek II coal lease application on March 24, 2006. The Powder 

River Regional Coal Team (PRRCT) was notified that Kiewit had filed an application for 

the Hay Creek II coal lease and was presented with the Hay Creek II LBA for review on 

April 19, 2006. At the April 19, 2006 public meeting, the PRRCT reviewed the Hay 

Creek II coal lease application. Kiewit presented information about their existing mine

and the history of the Hay Creek II LBA at that meeting. The PRRCT recommended 

that the BLM process the application. On September 18, 2006, BLM notified the 

Governor of Wyoming. BLM published a Notice of Intent to Prepare an Environmental 

Impact Statement and Notice of Public Meeting in the Federal Register on December 

21, 2007. Scoping notices were mailed to Federal, state, and local government 

agencies, conservation groups, commodity groups, and individuals who could be 

impacted by this LBA. BLM and the applicant jointly developed the distribution list. 

BLM published public scoping meeting notices in the local newspapers. On January 31, 

2008, a public scoping meeting was held in Gillette, Wyoming. The scoping period 

commenced with publication of the EPA’s Notice of Availability on December 21, 2007 

and extended for 60 days, during which time BLM received written, e-mailed, and 

telephoned comments from four entities.

A Notice of Availability and Notice of Public Hearing for the Buckskin Mine Hay Creek II 

Coal Lease Application Draft EIS was published in the Federal Register by the EPA on 

March 12, 2010. Parties on the distribution list were sent copies of the Draft EIS at that 

time and the Draft EIS became available on the Wyoming BLM webpage. A 60-day 

comment period on the Draft EIS commenced with publication of the EPA’s Notice of 

Availability. The BLM’s Federal Register notice announced the date and time of the 

formal public hearing, which was held on April 22, 2010, in Gillette, Wyoming. The 

purpose of the public hearing was to solicit public comment on the Draft EIS, fair market 

value, maximum economic recovery, and the proposed competitive sale of the lease for 

Federal coal from the LBA tract. No individuals presented statements on the draft EIS 

during the hearing. Written comments on the draft EIS were received from 10

individuals, agencies, or organizations during the comment period.

A notice announcing the availability of the Buckskin Mine Hay Creek II Coal Lease

Application Final EIS was published in the Federal Register by the EPA on July 29, 

2011; parties on the distribution list were sent copies of the Final EIS at that time. The 

review period was open for 30 days after the EPA’s Notice of Availability published in 

the Federal Register.
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Comments that BLM received on the Draft EIS and how BLM considered these 

comments during the preparation of the Final EIS were included in Appendix D of the 

Final EIS. BLM received eight comment letters regarding the Final EIS. Of the eight

letters, six letters were from individuals, one letter was a form letter, and one letter has 

been compiled from letters from individuals. The form letter was received from 1,862

individuals. Within the form letter, 69 individuals modified their letter to include 

additional comments on eight subjects. The six individual letters were from: the U.S. 

Environmental Protection Agency, the Powder River Basin Resource Council, WildEarth 

Guardians, the Wyoming Game and Fish Department, the U.S. Fish and Wildlife 

Service, and Mrs. Laura Rogers. The issues of greatest concern were: power plant 

GHG emissions from PRB coal combustion, PRB air quality, wanting greater emphasis 

on renewable energy development from the BLM, concern about the success of the 

mining reclamation process, concern about water resources in the PRB, revenue from 

coal resources, and the range of alternatives. Comments that BLM received on the 

Final EIS have been reviewed and evaluated, and comment letters and the BLM 

responses are available at

http://www.blm.gov/wy/st/en/info/NEPA/documents/hpd/HayCreekII.html. Written comments 

and the transcript of the formal hearing are also on the Hay Creek II Coal EIS webpage. 

All comments that were received were considered in the preparation of the Final EIS

and in this Record of Decision. 

SUMMARY OF THE PROPOSED ACTION AND ALTERNATIVES

The EIS analyzed the proposed action and two alternatives in detail for the Hay Creek II 

LBA. Chapter 2 of the EIS contains a full description of each. Alternatives considered 

under the EIS were limited to alternatives associated with leasing or not leasing the coal 

in the applied for Hay Creek II LBA. As the Interior Board of Land Appeals (IBLA) 

recently held, “agencies enjoy considerable discretion in defining the purpose of, and 

need for, a particular project. When BLM is asked to approve an application or permit, it 

should consider the needs and goals of the parties involved in the application or permit, 

as well as the public interest” and “It is BLM’s purpose and need for action that 

determines the range of alternatives and provides a basis for the selection of an 

alternative in a decision.” Powder River Basin Resource Council, 183 IBLA 242 (March 

14, 2013). Summarized descriptions of the alternatives analyzed in the EIS are 

presented below:

Proposed Action: Hold a competitive sale for the Federal coal lands as applied 

for and issue a maintenance lease to the successful bidder.

Under the Proposed Action, the lands applied for in the Hay Creek II application by 

Kiewit would have been offered for lease at a competitive sealed-bid sale. As applied 
14

for, the tract included approximately 419 acres. The applicant estimated that the lands 

contained approximately 77.2 million tons of in-place Federal coal. This alternative 

assumed that the applicant would be the successful bidder and that the coal would be 

mined, processed, and sold by the Buckskin Mine.

Alternative 1: The No Action Alternative

Under Alternative 1 the Kiewit application to lease the coal included in the Hay Creek II 

LBA tract would be rejected. The tract would not be offered for competitive sale at this 

time, and the coal included in the tract would not be mined. Under this alternative, the 

Buckskin Mine would mine its remaining 344.3 million tons of recoverable coal reserves 

on the existing Buckskin mine leases in approximately 14 years at an average 

production rate of approximately 25 mmtpy (million tons per year).

Rejection of the application would not affect permitted mining activities or employment 

at the Buckskin Mine during the remaining life of the mine. 

Alternative 2: Reconfigure the tract and hold one competitive sale for Federal

coal lands in the tract as modified by BLM and issue a lease to the successful 

bidder.

Along with the Federal coal lands that were applied for by Kiewit, BLM identified and 

analyzed additional acres of unleased Federal coal adjacent to the edge of the 

application land. These additional lands and the tract as applied for are referred to as 

the BLM study area. The BLM study area extends north and west of the proposed tract 

to encompass approximately 1,883 acres of unleased Federal coal. The study area 

enabled BLM to evaluate and explore the potential of increasing competitive interest in 

the tract, allowing for more efficient recovery of Federal coal in the area, and reducing

the likelihood of bypassed Federal coal. 

Under the selected configuration which excludes all lands for which qualified surface 

owner consent was not obtained, the Hay Creek II LBA modified tract includes

approximately 1,253.27 acres and BLM estimates that those acres contain 

approximately 167,001,577 tons of mineable coal.

The legal description of the lands to be offered for competitive sale under Alternative 2, 

BLM’s selected tract configuration for the Hay Creek II LBA tract are:

Hay Creek II LBA

T. 52 N., R. 72 W., 6th P.M., Wyoming

Sec. 7: Lot 21; 21.38
15

Sec. 8: Lots 13 through 16; 162.00

Sec. 9: Lot 13, 14; 80.57

Sec. 17: Lots 1 through 4, 17, 19, 21, 23; 247.40

Sec. 18: Lots 5, 14, 18, 19, 21, 24, 25, 27, 30; 285.09

Sec. 19: Lots 6, 7, 10, 11, 14, 15, 17 through 19, 22, 23, 26, 27. 456.83

Containing 1,253.27 acres, more or less.

The land descriptions and acreage are based on the BLM Status of Public Domain Land 

and Mineral Titles Approved Master Title Plat as of December 5, 2012. The coal estate 

in the tract described above is Federally owned. Surface ownership consists of private 

lands owned by Kiewit Mining Properties Inc.

 

ALTERNATIVES CONSIDERED BUT NOT ANALYZED IN DETAIL

Further descriptions of these alternatives may be found in Chapter 2 of the Final EIS.

Alternative 3

Alternative 3 assumes that the successful qualified bidder would be someone other than 

the applicant and that this bidder would plan to open a new mine to develop the Federal

coal resources. Under this alternative, as under the Proposed Action and Alternative 2, 

BLM would hold a competitive coal lease sale and issue a lease for the lands included 

in the Hay Creek II LBA tract. In BLM’s current estimation, in order for a new mine to 

open in the Wyoming PRB the first lease would need to contain approximately 500 to 

600 million tons of coal. 

This alternative was considered but was not analyzed in detail because it was unlikely 

that a new mine would start up by the lease of this tract. The total amount of coal 

included in the tract is not sufficient to consider opening a new mine. Also, a new mine 

would create a new source of air quality impacts. The potential difficulty in obtaining an 

air quality permit is another issue that could discourage new mine starts in the PRB. 

Alternative 4

Under Alternative 4, the BLM would have delayed the sale of the Hay Creek II LBA tract 

as applied for in to allow CBNG resources to be more completely recovered prior to 
16

mining. If market prices increased in the future, bonus and royalty payments to the 

government would have been higher if the tract was offered for sale at a later date. 

This alternative was not analyzed in detail because it would not produce substantially

different impacts than other alternatives that were analyzed in detail. First, rental and 

royalty provisions in the proposed lease provide for the U.S. to benefit if coal prices 

increase by the time of mining. Royalty and tax payments are collected at the time the 

coal is sold. They increase as coal prices increase, which allows the United States to 

benefit if coal prices have increased by the time of mining. Second, as described in 

Chapter 2 of the EIS, several mechanisms are already in place to facilitate continued 

CBNG recovery prior to mining the Hay Creek II LBA. 

 

CONFORMANCE WITH EXISTING LAND USE PLANS

Under the requirements of FCLAA, lands that are being considered for Federal coal 

leasing must be included in a comprehensive land use plan and leasing decisions must 

be compatible with that plan. The Approved Resource Management Plan for Public 

Lands Administered by the BLM Buffalo Field Office (RMP), which was completed in 

1985 with an RMP Plan Update in 2001 and an RMP Plan Amendment in 2003, governs 

and addresses the leasing of Federal coal in Campbell County. 

The major land use planning decision that BLM must make concerning Federal coal 

resources is a determination of which Federal coal lands are acceptable for further 

consideration for leasing. There are four coal screening procedures that BLM uses to 

identify these coal lands. The screening procedures require BLM to: 1) estimate 

development potential of the coal lands, 2) apply the unsuitability criteria listed in the 

regulations at 43 CFR 3461, 3) make multiple land use decisions that eliminate Federal

coal deposits from consideration for leasing to protect other resource values, and 4) 

consult with surface owners who meet the criteria defined in the regulations at 43 CFR 

3400.0-5 (gg) (1) and (2). The coal screens were developed for Federal decisionmaking and are utilized in environmental analyses associated with BLM RMPs, EISs, 

and other evaluations, and resource management activities.

Under the first coal screening procedure, a coal tract must be located within an area 

that has been determined to have coal development potential in order to receive further 

consideration for leasing [43 CFR 3420.1-4(e)(1)]. The Hay Creek II coal LBA is within 

the area identified by BLM as having coal development potential. 

The second coal screening procedure requires the application of the coal mining 

unsuitability criteria which are listed in the Federal coal management regulations at 43 

CFR 3461. These criteria have been applied to high to moderate coal development 

potential lands in the Wyoming PRB, including the Hay Creek II LBA tract and 

surrounding lands. 
17

Unsuitability Criterion Number 3 states that lands within 100 feet of the outside line of 

the right-of-way (ROW) of a public road and shall be considered unsuitable for surface 

coal mining. The areas where Collins Road crosses and borders BLM’s delineated Hay 

Creek II LBA tract and the area where the tract contacts the ROW for McGee road and 

within 100 feet of the outside line of these road ROWs are designated unsuitable for 

surface coal mining under criterion 3 unless a permit to move the roads is approved by 

the Campbell County Board of Commissioners. Although the lands within these road 

ROWs have been determined to be unsuitable for mining, because coal leasing 

regulations do not allow leasing in less than 10-acre aliquot parts, lands in the ROWs

are included in the tract to allow for efficient recovery of all mineable coal adjacent to 

and outside of these areas.

Unsuitability Criterion Number 3 also states that lands within 300 feet of an occupied 

dwelling shall be considered unsuitable for surface coal mining. Two occupied 

dwellings are located within the BLM general analysis area. One dwelling identified in 

the EIS, a rental property owned by the Buckskin Mine, is located within the study area 

on the west side of McGee road, but is located outside the delineated sale tract. The 

second dwelling is located on the west side of Collins Road and is also outside the

delineated sale tract. Each occupied dwelling and a 300 foot buffer zone surrounding 

each occupied dwelling is designated unsuitable for surface coal mining under criterion 

3 unless the dwelling is moved or becomes no longer occupied. Although the lands 

within these buffer zones have been determined to be unsuitable for mining, some lands 

within the buffer zones are included in the delineated tract in order to allow for efficient 

recovery of all mineable coal which lies outside of the buffer zone.

Unsuitability Criterion Numbers 11 and 12 concern bald and golden eagle nest, roost, 

and concentration areas. There are no bald or golden eagle nests or identified roosts or 

concentration areas in the general analysis area. Consultation with the U.S. Fish and 

Wildlife Service on wildlife issues has been completed for the leasing stage (see 

appendix 3); continued evaluation for bald and golden eagles and other high interest 

resident species will continue during the permitting process.

Unsuitability Criterion Number 15 concerns high interest resident species. No sagegrouse leks are present in the general analysis area. Consultation with the U.S. Fish 

and Wildlife Service on wildlife issues has been completed for the leasing stage (see

appendix 3). Sage-grouse will continue to be evaluated during the permitting process.

 

No other lands included in the Hay Creek II LBA delineated tract were found to be 

unsuitable for mining during the application of the unsuitability criteria for BLM’s 2001 

Buffalo RMP Update. 

The third coal screening procedure, a multiple land use conflict analysis, must be 

completed to identify and “eliminate additional coal deposits from further consideration 

for leasing to protect resource values of a locally important or unique nature not 

included in the unsuitability criteria,” in accordance with 43 CFR 3420.1-4(e)(3). The 
18

2001 Buffalo RMP update addresses two types of multiple land use conflicts: 

municipal/residential conflicts and multiple mineral development (coal versus oil and 

gas) conflicts. 

The municipal/residential multiple land use conflict was addressed by applying buffers 

around the municipal planning boundaries for the major municipalities within the BLM 

Buffalo Field Office area, including Gillette and Wright. BLM’s selected Hay Creek II 

LBA tract configuration does not extend into any of the municipal buffer zones. 

BLM’s evaluation of the multiple mineral development conflicts related to issuing a lease

for the Hay Creek II lands is discussed above in the “Pending Coal Leasing Applications 

and Other Proposed Projects in the Wyoming Powder River Basin” section of this record 

of decision.

The fourth coal screening procedure requires consultation with surface owners who 

meet the criteria defined in the regulations at 43 CFR 3400.0-5 (gg) (1) and (2). Under 

BLM’s selected alternative, surface ownership consists of privately owned lands. If 

private surface owners are determined to be qualified under this CFR, then qualified 

surface owner consent is required before those lands can be included in a Federal coal 

lease. The Oedekovens are qualified surface owners of lands within the study area, but 

not in the tract as delineated by the BLM. The land surface owned by the Odekovens

has not received surface owner consent for leasing at this time and has been removed 

from consideration for leasing under the Hay Creek II coal lease application. Parts of 

T47N R71W Sections 7, 18 and 19 were removed from consideration for leasing under 

the Hay Creek II LBA. Kiewit Mining Properties Inc. is the remaining surface owner in 

the configured tract. Thus, the tract as delineated contains no qualified surface owner 

lands. 

In summary, the lands in the Hay Creek II LBA tract have been subjected to the four 

coal leasing screens and are determined to be acceptable for further consideration for 

leasing. Thus, a decision to lease the Hay Creek II LBA Federal coal is in conformance 

with the current BLM Buffalo RMP.

COMPLIANCE, AND MONITORING 

If the Hay Creek II LBA tract is leased, the lease will contain standard coal lease 

stipulations and also BLM Special Stipulations. BLM has applied special stipulations 

(Appendix 2) to avoid environmental damage or potential conflicts affiliated with cultural 

resources, paleontological resources, threatened and endangered species, multiple 

mineral development of oil and/or gas and coal resources, resource recovery and 

protection, and/or public land survey. Special stipulations were identified in Appendix E

of the Final EIS. The final special stipulations are attached to this decision (see 

appendix 2) and will become part of the Federal coal lease and pertain to all lands 

described in the Federal coal lease tract.
19

Prior to mining a coal lease area, the lease must be permitted for mining by OSM and 

WDEQ. If a lease is permitted for mining, additional conditions and stipulations may be 

assigned by OSM and WDEQ. Please see Section 1.3 of the Final EIS for additional 

information regarding regulatory authority and responsibility in relation to coal mining in 

Wyoming. 

After Federal coal leases are issued, SMCRA gives the OSM the authority to administer 

programs that regulate surface coal mining operations. The WDEQ has entered into a 

cooperative agreement with the Secretary of the Interior to regulate surface coal mining 

operations on Federal and nonFederal lands in Wyoming. To ensure that the revised 

mining plan is in compliance with the leasing stipulations, BLM has a responsibility for 

the R2P2 prior to approval of the mining plan. Before any mining operations can begin 

on the Hay Creek II LBA tract, an R2P2 applicable to the tract must be approved by the 

BLM. 

If Kiewit is the successful, qualified high bidder for the Federal coal included in the Hay 

Creek II tract, a permit revision must then be approved by the WDEQ/LQD. A Mineral 

Leasing Act (MLA) mining plan revision must also be approved by the Assistant 

Secretary of the Interior before the coal in the tract can be mined. The existing 

mitigation measures specific to the currently approved mine plan for the adjacent mine 

would then be revised to include any new mitigation measures specific to the Hay Creek

II LBA tract. The mining permit would also be amended to include any new mitigation 

requirements. 

If the successful bidder on the Hay Creek II LBA coal lease sale does not currently 

operate a mine that is adjacent to the Hay Creek II LBA tract, then the bidder would

likely propose to construct a new mine in order to recover these Federal coal reserves. 

Because this would be a new mine start, the proponent would then submit a new permit 

application package to WDEQ/LQD for approval. A new MLA mining plan would also 

need to be submitted and approved by the Assistant Secretary of the Interior before the 

tract could be mined. The approved permit(s) would include any mitigation measures 

and monitoring plans specific to mining the newly leased tract.